Termination a rental contract

Premises urgently required for own use

The lessor and lessee can both terminate a rental contract for business premises by giving notice after the expiry of the initial period, usually five years. However, the big difference is that the lessee does not need to give a reason for doing so, whereas the lessor can only terminate the rental contract in two specific situations. These are described by the law. In short, the law stipulates that a lessor of so-called ‘290 business premises’ may only terminate the rental contract in case of ‘poor operational management’ on the part of the lessee and if the lessor urgently needs the business premises for its own use. This category of business premises includes the shop (retail space).

Termination of rental contract

After the expiry of the second term, also usually five years, both the lessee and the lessor can terminate the rental contract. Again, the lessee does not need to give a reason. For the lessor, the law now offers some more scope to give notice to terminate the rental agreement. Alongside the grounds for termination referred to above – poor operational management or the premises being urgently required for the lessor’s own use – there is now a third possibility. If the lessee refuses a reasonable offer of a new rental contract, that can also lead to the termination of the rental contract. In the literature and case law, there is much discussion about the question of what constitutes a reasonable offer. This differs from case to case.

Giving notice to terminate a rental contract

The lessor must give at least three years’ notice to terminate the rental contract. It may be advisable to have this performed by a lawyer who is familiar with commercial tenancy law, because this letter will play an important role in any legal proceedings. It is possible to agree a longer notice period in the rental contract; shorter is not permitted. A letter of this kind is subject to a number of legal requirements. If the lessee has not notified the lessor within six weeks that he agrees to the termination of the rental contract, the lessor and his lawyer have no choice but to take him to court.

Specialist in commercial tenancy law

In situations like these, it is important for both lessee and lessor that the procedural requirements imposed by the law are complied with on time and properly. A specialist in commercial tenancy law may be the answer. The AMS specialist in commercial tenancy law assists both lessees and lessors. Feel free to contact us for a free meeting with no obligation.